Hey, drinkers, savor that next cocktail – the price of liquor goes up in August.
The price hike has no relation to supply or demand; the good folks at the Liquor Control Board just decided they needed more money – $80 million, to be exact.
Don Poffenroth is co-owner of Dry Fly Distilling in Spokane, and he’s justifiably upset. With this price increase, he told me, the state makes more money on his product than he does. When Dry Fly sells a $15 bottle of vodka to the state, the state adds $15 with taxes and markups. The new increase will boost the state’s take by another $2.
“This forces the little guy like us to make a decision: are we going to maintain the shelf price?” Don said. “If we do, that means less revenue for us.”
Buy a bottle of booze – any bottle – and about 75 percent of the cost goes to taxes and price markup. It’s a good business for Washington. Liquor sales and taxes brought in $877 million last year.
It’s time for a change. Washington should privatize liquor distribution and sales.
It’s nothing less than socialist for the state to monopolize an industry that could be run in the private sector. The state doesn’t control car sales or fast food; why should alcohol be treated differently? Government shouldn’t prevent entrepreneurs from pursuing legitimate business opportunities.
Privatization would allow businesses to create jobs, make a profit, and stimulate the state’s economy. The state could divest itself of the liquor infrastructure – warehouses, delivery routes, retail stores. The sale of these assets, plus moving liquor board employees into the private workforce, would allow the agency to focus on regulatory enforcement. The state would still collect taxes on alcohol sales. Plus, new businesses would contribute additional tax revenue. Some experts, like Geoffrey Segal of the Reason Foundation, have suggested that states, by privatizing, could collect more revenue by eliminating operating costs.
The Liquor Control Board says it must control sales for the protection of minors. That’s an insult to responsible business owners; privatizing sales would improve accountability. Who has better incentives – a business owner who wants to protect his reputation in the community and who risks closure for violations, or unelected board members?
With the latest price increase, Dry Fly Distilling can make more money selling its liquor out of state. How is that good for Washington?
It’s time for the state to get out of the liquor business.
Michael Reitz is general counsel of the Evergreen Freedom Foundation, a free-market policy institute in Olympia.
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